Why Treasuries are unlikely to regain a lot more ground
The main reason why the yields of long-dated Treasuries haven’t dropped all the way back to their levels before the start of the Iran war is a major reassessment of the prospects for Fed policy. And with investors now pricing in a path for the federal funds rate that is broadly similar to the one we envisage in our baseline scenario, we doubt the rally in bonds will gather much more momentum.
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